Supreme Court Declares Electoral Bonds Scheme and Associated Amendments Unconstitutional

Orhan Wadia
Orhan Wadia  - Editor
3 Min Read

In a landmark decision, the Supreme Court (SC) has struck down the electoral bonds scheme, terming it unconstitutional, and has ordered the publication of transaction details, putting an end to the controversial model criticized for its lack of transparency.

A constitution bench, led by Chief Justice D.Y. Chandrachud, unanimously ruled that amendments made to laws governing elections, taxation, and corporate donations to facilitate the electoral bond scheme were unconstitutional, violating citizens’ right to information.

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The apex court directed the State Bank of India (SBI), the sole issuer of electoral bonds, to immediately cease the issuance. The bank is required to submit names of bond buyers, purchase dates, and donation amounts to the Election Commission (EC) by March 6. The EC is mandated to publish these details on its website by March 13.

Introduced in the 2017 Union budget, the electoral bonds scheme allowed citizens and local companies to purchase bonds and donate any amount to political parties of their choice. However, its lack of transparency, with bearer instruments not disclosing buyer or payee information, has faced criticism.

The judgement is expected to have significant implications on campaign finance, particularly as the general election approaches. The total amount generated through electoral bonds between March 2018 and January 2024 was ₹16,518.11 crore, according to the Association for Democratic Reforms (ADR).

Opposition parties welcomed the decision, emphasizing its importance in ensuring transparency in election funding.

The court also mandated that electoral bonds not encashed within the 15-day validity period must be returned by political parties, and the issuing bank will refund the amount to the purchaser’s account. The EC is required to publish these details by March 31.

The judgement asserted that the electoral bond scheme and associated amendments infringe upon the right to information and violate Article 19(1)(a) of the Constitution. It emphasized that the scheme is not the only means to curb black money, and there are alternative methods.

Legal experts noted that the ruling does not impact bonds encashed earlier, and political parties can continue to receive direct funds within the confines of regulations governing corporate donations.

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